pageok
pageok
pageok
Taxes in Arlington, VA:

I can't let 2006 end without noting my outrage that my home county of Arlington, Virginia, has seen fit to raise the personal property tax on vehicles from 4.4 to 5% of value. The stated rationale is the need to provide property tax relief. Hello! Property values in Arlington have more than doubled in the past six years, and property taxes have risen along with the increase in values. Arlington has cut the property tax rate a bit, but is still taking in far, far more in property tax revenues than it did just a few years ago. If Arlington couldn't survive on its property tax revenues at the height of the greatest residential real estate boom in area history, I really wonder how the country government going to handle its finances once the decline in residential real estate values starts showing up in property tax assessments.

RainerK:
"I really wonder how the country government going to handle its finances once the decline in residential real estate values starts showing up in property tax assessments."

That's a no-brainer - raise the tax rates.
12.22.2006 9:37pm
Guest44 (mail) (www):
I'm a huge fan of Arlington, but your wonderment is entirely appropriate.
12.22.2006 9:42pm
LotharoftheHillPeople:
I moved to VA a few years ago, and I purposefully keep my old beater running -- rather than buy a nice new car -- because of that damned car tax.
12.22.2006 9:44pm
Waldensian (mail):
What kind of car do you drive? I'm in VA and drive a total beater. You won't believe the money I'm saving.
12.22.2006 10:44pm
Truth Seeker:
Government is like a living organism that just keeps growing, adding departments and buildings and projects. We need some shock therapy to cut it back down in size and then a law capping growth.
12.22.2006 10:45pm
Dave Hardy (mail) (www):
Yep, and look at your utility bills to see how many state and county taxes are hidden in those as a sort of sales tax.

Back in my day, they taxed cars, required a seal on the windshield to prove you paid it, and charged for the seal.

And of courses when you bought the house you paid a stamp tax on the deed and a fee on the deed of trust recording -- think it was 1% of value. Here in AZ, when you record either it's $12.50, thank you.
12.22.2006 11:19pm
Richard A. (mail):
Actually the decline in real-estate values shouldn't affect the amount paid at all. The tax is simply divided among all properties and assessed proportionately. Since all should either rise or fall at the same rate, the tax paid should not change.
12.22.2006 11:37pm
AppSocRes (mail):
I'd add to Richard A.'s comment the observation that assessed value and market value are seldom comparable under the best of circumstances and in volatile housing markets are wildly out of whack with one another.
12.22.2006 11:40pm
DavidBernstein (mail):
Richard, I'm not sure what you're talking about. Each house has an individual assessed value, and tax is paid at 82 cents per thousand dollars of assessed value. The assessed value is more or less (usually a bit less) market value as of the previous Summer.
12.22.2006 11:45pm
Eli Rabett (www):
Data shows that it takes about 33-40% of total income for government expenditures to maintain a first world country excluding health care. In some countries health care is paid out of taxes, and in others it is, well...In any case health care costs about 10-14% additional. When you add health care costs to the US total government expenditures you get about 46%. Now you can rant about this and that but taxes are the admission fee to civilization. You could also move to Somalia, taxes are lower there, and you won't have very long to worry about your car.
12.23.2006 12:25am
Eli Rabett (www):
The relationship between assessed and resale value is a decision made at the local level. Since the tax rate is also set at the local level this is a wash, with the important exception that commercial property is usually set at full market value. The effect is then to subsidize housing. Other locations do this with homeowner exemptions. Of course, in a fast moving market (up or down) gaps can and do appear.
12.23.2006 12:28am
DavidBernstein (mail):
Eli, so when property taxes were less than half as high six years ago, Arlington wasn't a "first world" country, but now that they've more than doubled, plus personal property and other taxs have risen, it is?
12.23.2006 12:56am
LotharoftheHillPeople:
Waldesian,

It's a '94 Toyota. Annual car tax, including sticker: $50. Annual car insurance: around $300, at least as far as I recall.

I thought about getting a $50,000 new car, as I could easily afford it and it would be really nice to have a new car. But who wants to pay an extra $2,000 a year to the state of Virginia plus an extra $1,000 or so a year to my insurer? If I had the car for 5 years, it would cost me $15k in depreciation plus abother $15k in annual taxes and insurance. It's not worth $30k for five years of having a nice car; I'll just stick with the beater.
12.23.2006 1:06am
CrazyTrain (mail):
Wow, David. That was one of the most nonsubstantive responses I have ever seen. Congratulations, and way to dodge the macro-issue Eli raised. In the words, of the internets, you got pwn3d.
12.23.2006 2:01am
Ted Frank (www):
David, you want to see really bad "property tax relief" in Arlington? Arlington has a program for homeowners that just gives them $600 in cash. The only requirement: less than $70k in income and $300,000 in non-real-estate property. In other words, Jenna Bush can own a million-dollar house free and clear of a mortgage in Arlington and qualify for free money from the county that your car tax is going to pay, so long as she doesn't have $300k in other assets.
12.23.2006 3:40am
Ted Frank (www):
Oh, and I drive a 2004 Prius, and am on the hook for about $500 this year. Lord knows how much I'd pay if my car was worth something. The effect is magnified because the state reduced the Gilmore program of rebating car taxes.
12.23.2006 3:42am
Oren (mail):
Let's see here, Lake County Illinois . . .

Property Tax: $3/thousand
Sales Tax: 6.25% state, 1.5% local
State Income Tax: 3% above $5k - 5% of property taxes paid at primary residence

To be fair, there is a federal deduction for state income taxes. Still, it's a pretty high load.
12.23.2006 6:57am
Bottomfish (mail):
If Arlington couldn't survive on its property tax revenues at the height of the greatest residential real estate boom in area history, I really wonder how the country government going to handle its finances once the decline in residential real estate values starts showing up in property tax assessments.

Well, Arlington may want to try the Massachusetts solution. The Commonwealth bails out towns from its own tax revenues. This is called "local aid." The towns were very unhappy with ex-governor Mitt Romney because he didn't provide enough local aid. At the same time they have "circuit breakers" in place on property taxes, mainly for the sake of retired senior citizens living in houses obviously too big for them. To ask the seniors to sell their houses would no doubt be considered cruel and inhumane.
12.23.2006 8:10am
David M. Nieporent (www):
Wow, David. That was one of the most nonsubstantive responses I have ever seen. Congratulations, and way to dodge the macro-issue Eli raised.
He didn't raise an issue; he just made something up. "Data" doesn't show anything of the kind of what he said. The fact that government is big doesn't "show" that government must be big, let alone that it must be big "to maintain a first world country." It doesn't show anything about "first world countries," since it provides no control group for comparison.

Given the large variations between the countries in his chart, it would be pretty stupid to draw any conclusions about what is "needed."
12.23.2006 8:34am
dave s (mail):
Seems to me there are several things going on here - one is that Arlington has been raising expenditures year after year, one is that this has been coming out of the property tax mostly (and they are not getting their comfy automatic increase in property tax revenue while-cutting-stated-rates this year, nor will they for several years to come) and the last is how much is the right amount to spend.

Arlington has huge amounts of money coming in. Population 200,000, jobs 200,000. So a bedroom community has to pay for its services with the taxes on, say, 100,000 beds and 15,000 cubicles, gas pumps, lumber yards, and Arlington has as many cubicles as beds to tax. And Arlington has been spending at a very high level - $17,000 per student in the public schools, $100 million for a recreation center over near Reagan National, another $100 million for a new Washington-Lee High School. And there's more! We have publicly supported Arts Centers, with studios for lucky local artists. As Everett Dirksen once said, pretty soon you are talking about real money.

Arlington County Taxpayers Assn quoted the Virginia Auditor of Public Accounts as follows for 2005:

Jurisdiction Total Spending Population Spending Per Capita
Arlington $721,741,259 195,600 $3,690
Fairfax $3,215,226,492 1,022,100 $3,146
Loudoun $733,057,708 252,300 $2,906
Prince William $967,494,000 355,300 $2,723
Alexandria $461,202,346 135,200 $3,411
Falls Church $52,015,745 10,800 $4,816

ACTA also says 2007 "budget is $1.0034 billion... dividing that by 203,000 residents (rounded) means that local government in Arlington County will spend just about $4,943 for each man, woman, and child." - this is a 25% increase since 2005. Recently, no worthy project has gone unfunded.

If you are spending at that level, the money has to come out of your pocket somehow. It was easy, during the seven fat years, for the Board to lower the tax rate by a little, but get more revenue because the assessed property tax values were up. In future, during the seven lean years to come, things will be a lot more contentions.
12.23.2006 8:41am
Porkchop (mail):
David, we don't have a car tax in Virginia anymore. Jim Gilmore abolished it. Oh, wait, maybe not.

The good news is he's running for president so he can abolish car taxes nationwide.
12.23.2006 8:49am
tefta2 (mail):
David, I guess you do know. They'll raise taxes on vehicles or on anything else they can raise. Check the schools, that's where a lot of tax money is being thrown down the black hole of leftwing propaganda.
12.23.2006 9:34am
MD22304:
Here in Alexandria, there was much wailing when the public school budget had to be cut back by 1.5 million dollars per order of the city council. (There is an elected school board, but the city has final say on the budget.)

This one percent cutback was going to destroy public education. It turns out that 70% of the cut was an elimination of an increase in pension contributions. Thank you, public-employee unions.

Property taxes are regressive, and the automobile tax is especially regressive. Gilmore's plan provided a rebate on taxes paid on the first $20,000 of assessed value. That's progressive, right? Oh no, we can't do that, the man is a war criminal. At least we ended up with a partial reduction (75%) on the tax on the first $20,000. What was Gilmore thinking? How dare you use funds from a (progressive) income tax to offset a (regressive) property tax!?
12.23.2006 10:36am
billb:
I find myself longing for some of the property tax levels mentioned above. At 2.54%, my property taxes down here in Travis County, TX seem downright astronomical. That being said, I don't know if I'd trade them for a state income tax. However, considering that my state income taxes would be deductible from my federal taxes while my state property taxes aren't, it might not take much convincing.
12.23.2006 10:46am
Porkchop (mail):

Property taxes are regressive, and the automobile tax is especially regressive. Gilmore's plan provided a rebate on taxes paid on the first $20,000 of assessed value. That's progressive, right? Oh no, we can't do that, the man is a war criminal. At least we ended up with a partial reduction (75%) on the tax on the first $20,000. What was Gilmore thinking? How dare you use funds from a (progressive) income tax to offset a (regressive) property tax!?


Well, if he had actually had a plan to make up the revenue shortfall or to balance the budget, it might have made sense. But he didn't, and he left the Commonwealth a fiscal disaster.
12.23.2006 11:21am
Jeek:
The Commonwealth bails out towns from its own tax revenues.

That's not going to happen here. The rest of Virginia regards northern Virginia as a cash cow - tax money comes from northern Virginia to the rest of the state, never to it!

Like others who have responded here, I buy slightly used cars and keep them running as long as possible, and one of the reasons I do so is I don't want to pay Virginia a bunch of taxes.

Let's put this in perspective. If Dave owns a car worth $20,000, he now has to pay $1000 in personal property tax instead of $900 - a whopping extra $100 (I raise my pinky to my lips, Dr. Evil style). Since the man rents rather than owning, he pays no real estate taxes, and that hundred bucks or so represents the sum total of the extra tax burden imposed on Dave's groaning back. This is the littlest violin...
12.23.2006 12:11pm
Porkchop (mail):

Since the man rents rather than owning, he pays no real estate taxes, and that hundred bucks or so represents the sum total of the extra tax burden imposed on Dave's groaning back.

I don't think that is strictly correct. Presumably his landlord pays taxes on the real estate Dave rents, and a portion of his rent is pays those taxes. Dave, however, gets no federal tax deduction for property taxes paid.

Dave, stop dithering and just buy a house. ;-)
12.23.2006 1:07pm
Truth Seeker:
However, considering that my state income taxes would be deductible from my federal taxes while my state property taxes aren't, it might not take much convincing.

Bill, what are you talking about? There's a line on my 1040 Schedule A for deducting property taxes. Also that nice new deduction for sales taxes for those of us with no state income tax.

In Florida we also have that horrible 2.5% property tax, BUT
-No state income tax
-Sales tax 7% (less than some with income tax and not on food or drugs.)
--Car tax of about $50 even for new cars
12.23.2006 2:06pm
Hans Bader (mail):
Arlington County has doubled spending over the last five years. Yet its roads are crumbling and falling apart, as it squanders money on public employee unions at the expense of infrastructure.

Arlington spends 50 percent more than Fairfax County on its schools, yet its students have lower test scores.

In the Bible, Pharaoh wisely listened to Joseph and saved money during the fat years in order to survive during the predicted famine which followed.

Arlington County's Board has foolishly done the opposite, borrowing money like crazy through bond issues during the fat years (the years in which real estate values and property taxes skyrocketed), to the point that 20 percent of school spending is on debt.

Now they have little cushion to rely on during the upcoming lean years, when real estate values will plunge, reducing property tax revenues.

I predict that they will hike taxes, and irresponsibly increase spending to even higher levels.

No amount of spending is too wasteful for the Arlington County Board, as the local paper, the Arlington Sun-Gazette, frequently points out.
12.23.2006 3:23pm
Ilya Somin:
Arlington County has doubled spending over the last five years. Yet its roads are crumbling and falling apart, as it squanders money on public employee unions at the expense of infrastructure.

Arlington spends 50 percent more than Fairfax County on its schools, yet its students have lower test scores.


These are some of the reasons why I live in Fairfax County, but right on the border with Arlington.
12.23.2006 3:38pm
Elliot123 (mail):
I note nobody has asked if the county is 1) spending money in appropriate areas, and 2) operating at peak efficiency.

A line item budget with actual expenditure items rather than general categories is enlightening. Most folks look at it for the first time, scratch their heads, and ask, "Why am I paying for this...and this...and this?"

The other question is whether the county is getting the most for each dollar spent. Private industry is continiually purging its personnel as the economy expands and individual company operations expand. When's the last time we saw a 15% across the board cut in personnel at a local government? Private industry can do it; it happens all the time. Why can't government?

As a young manager I received my fist orders to cut 10% of the people in my organization. I immediately said it couldn't be done, impossible, the sky would fall, etc. An older guy took me aside and said, "If you can't do it, then you will be in that ten percent. You're supposed to be smart enough to figure it out." So, I cut 10%. The sky didn't fall, we met our quotas, we got more efficient, we got smarter, and business was profitable.

Now I give the orders to cut 10%, listen to the griping from the younger guys, and pass on that same advice I once received. And it all tends to work out. It would work with count government, too.
12.23.2006 4:48pm
Henri LeCompte (mail):
David:
Don't you know that you should be happy to pay all those taxes? That's what makes America great and "first world"-- our big government and our high taxes! (Fortunately for us, other countries don't follow our example and raise their taxes, or grow their government.)

Complaining about taxes is selfish and short-sighted! The tax money is being spent with maximum efficiency, and when taxes go up, you can rest assured that more and more good things are about to happen! In fact, you should relish the opportunity to pay more taxes! The world becomes a better and better place with every dollar the government takes away from you to spend on the common good.
12.23.2006 4:50pm
Perseus (mail):
Data shows [sic] that it takes about 33-40% of total income for government expenditures to maintain a first world country excluding health care...taxes are the admission fee to civilization...

More like the admission fee to dying civilizations of last men.
12.23.2006 6:25pm
Waldensian (mail):

It's not worth $30k for five years of having a nice car; I'll just stick with the beater.

You're preaching to the choir, believe me. I take good care of a 99 Passat and will drive it until it turns to dust around me. I pay essentially nothing in property taxes or insurance.

The savings has been sufficient to pay for.... my airplane. Well, the very small airplane I own half of. Well, okay, it doesn't cover ALL the expense, but you get the idea!
12.23.2006 6:41pm
Brian G (mail) (www):
I love the government's rationale: We need to raise your taxes to save you on your taxes. Here are some analogies that would never cut it in the private sector:

- Mr. Volokh at Wal-Mart: - "Sir, I gave you 20% off on your purchase of Spider-Man Underoos as the sale paper says but I had to charge you extra for the asparagus-flavored ice cream to cover the difference."

- Mr. Carpenter at the car dealer: "Sure, I'll throw in the low-riding rims at no extra charge, but I'll be forced to up the cost of the wiper blades to cover my losses."

In all seriousness, taxes and over-regulation are why I evacuated from New Jersey nearly six years ago to move out west. (I can't believe N.J. hasn't tried this car tax yet). I don't feel sorry for anyone who complains about them in New Jersey, because they voted those tax-and-spenders (re:Democrats) in office every single time no matter what. I can't believe that people just put up with this tax without making it a decisive campaign issue.
12.23.2006 10:51pm
fishbane (mail):
... And weirdly, us NYC residents don't chirp much about our admittedly high taxes, and we pay for the most of rest of the state, and do so with a much higher standard of living while dealing with absurd local costs of living. Go figure. I guess we are {godless heathens|dumb liberals|coastal elitists}, pick one. I'm sure I missed an insult; please add it. Oh, gay.

(Just to be clear, I'm not pleased that we have some of the highest healthcare costs in the country. That's dumb and obviously counterproductive, in both direct and indirect ways. But until the kneejerk reactions asserting breadbasket theories of who generates value in this country stop, I'm not going to stop pointing out where the money our nation runs on comes from. And it is not Kansas. Or Tennessee.)
12.24.2006 2:08am
godfodder (mail):
Fishbane:
Are you a fisherman? Beside the point, but I thought I'd ask, given your name. Or do you just denounce the little critters every morning, off the Battery walkways?

My point: Like you, I lived in NYC for many years, but eventually I decided that the cost of living was just killing me. A six figure income, and yet I was still living paycheck to paycheck. The usual story....

NYC's place as a seat of commerce (and the home of the NYSE) is an historical anomaly. That's all. Ports on the eastern seaboard are all in the same position. It doesn't mean that NYC has some special moral superiority, or special insight into capitalism that accounts for its prominance. Just historical luck, period. Sorry!

Actually, these days the city is forced to offer all sorts of tax incentives to big corporations to keep their HQ's in NYC. Otherwise they all woulda all moved to NJ years ago. Which explains, to a limited degree, why the cost of living/tax structure in that city is insane.

A lot of money runs through NYC in any given year. And a lot of federal tax dollars are generated as a result. But that would have happened anyway, regardless what you and I think. If NYC hadn't gotten there first, that action would have been spread out across dozens of states. And people in Iowa would be writing Volokh and telling us that we all owe them something.

Ya feel me?
12.24.2006 2:40am
American Psikhushka (mail) (www):
(Just to be clear, I'm not pleased that we have some of the highest healthcare costs in the country. That's dumb and obviously counterproductive, in both direct and indirect ways. But until the kneejerk reactions asserting breadbasket theories of who generates value in this country stop, I'm not going to stop pointing out where the money our nation runs on comes from. And it is not Kansas. Or Tennessee.)

With healthcare costs, aren't you a victim of your own success? Some excellent specialists are there, so wealthy people from other areas go there to be treated? I'm sure the high cost of living is a factor, but I'd bet some of it is because the personnel you have there is in fairly high demand.
12.24.2006 6:43am
Fran (mail) (www):
One thing for consideration:

We, as a country, have off-shored our most expensive jobs over the last 20 years.

Except those we supposedly can't export.

Why should the county commissioner make 62,000 plus benefits; we have a man/woman in India who'll do the same thing for 15,000 flat.

Shouldn't we at least consider the offer?
12.24.2006 6:24pm
Jeek:
I certainly don't see any reason a great deal of legal work couldn't be outsourced. Only thing preventing it is that pesky lawyer's guild...
12.24.2006 10:45pm
Waldensian (mail):

I certainly don't see any reason a great deal of legal work couldn't be outsourced. Only thing preventing it is that pesky lawyer's guild...


Another example of lawyer bashing based on ignorance.

A considerable amount of legal work is being outsourced right now. For example, it isn't at all unusual for us to export major litigation or merger document reviews and have them performed by (much much) cheaper talent overseas. These projects, which can require thousands of man hours, formerly were done by associates, or occasionally temp lawyers, in large US firms.

The cost savings to clients can be considerable, with no downgrade in quality, as far as I can tell.

We have yet to field a complaint from the "pesky lawyer's guild."
12.25.2006 10:44am
Eli Rabett (www):
Having tossed the Yule log onto the fire, what the Census table shows is that as a practical matter, government expenditures are a minimum of 1/3 of national income, 'bout 10-14% more if you include health care. That 1/3 includes social security payments, defence, garbage pick up etc.

Now, I am sure that everyone here could chop that in half, and it would be at least as successful as the Iraq war. In other words, if you have a remarkably consistent level of expenditure across a large number of different societies with different traditions, and you think they are all fools, maybe your plan is not so good.
12.25.2006 11:30am
Jeek:
So, Paralegal-type work is often outsourced - basic document review - but generally not the work that requires a law degree and the right to practice law, n'est-ce pas?

Do Filipino lawyers in Manila, or Indian lawyers in Bangalore, often practice law in the United States?
12.25.2006 2:15pm
American Psikhushka (mail) (www):
Eli Rabbett-

Now, I am sure that everyone here could chop that in half, and it would be at least as successful as the Iraq war. In other words, if you have a remarkably consistent level of expenditure across a large number of different societies with different traditions, and you think they are all fools, maybe your plan is not so good.

A lot of the economic principles being employed are flawed. The only thing that can create jobs and increase overall societal wealth is the private economy - the higher taxes are (above a certain baseline), the less jobs and wealth are created. But once taxes have been that high for so long those dependent on those funds - including politicians - represent entrenched interests that are hard to overcome. The tax money taken from the private economy and spent by the government has enormous opportunity costs. Here's a good paper illustrating these concepts with military spending in particular(pdf file):
http://www.mises.org/journals/scholar/woods2.pdf
12.25.2006 7:08pm
Eli Rabett (www):
Allow me to point out that our corporate nomenklatura and their kissing cousins, the rent seekers, are very entrenched interest that are impossible to overcome and further, that government initiatives, such as your bete noire, Social Security, Medicare, the five day work week, vacations, etc. are better than the poorhouse alternative your beloved private industry historically offered without legislation or strikes.

Private industry by itself is a ravening beast only interested in supporting the few who control its levers of power. It is only with the combination of government regulation and worker representation that it can be harnessed to benefit all. While any of these three groups can abuse their position, it strikes me that a bunch of people who scream about wonderful checks and balances, seek to unleash an unconstrained private industry. Hope you enjoy your trip through the sausage grinder.
12.26.2006 12:40pm
American Psikhushka (mail) (www):
Eli Rabett-

I'll grant you that they are powerful entrenched interests. But part of what gives them power is the government. If the government were smaller they'd be less able to use it against competitors and the public.

It is only with the combination of government regulation and worker representation that it can be harnessed to benefit all.

Why does it have to be "harnessed" to "benefit all" - we're talking about private property here. Do you need to be "harnessed" to "benefit all", Mr. Rabett? If "all" of us decide that you would best "benefit all" by cultivating turnips on a collective farm somewhere would that be acceptable? Is your solution communism then?
12.26.2006 3:32pm
David in NY (mail):
Well, Alexandria has one of the best high schools in the country -- its teachers regularly get national recognition as do its students. I suppose it costs some money to do that.
12.26.2006 3:44pm
American Psikhushka (mail) (www):
Eli Rabett-

Also, many of the regulatory functions could be privatized via private civil litigation.
12.26.2006 4:33pm